Smart Reasons to Save, Use and Invest Money

Wealth Tip #5: Increasing Your Financial Savings Delta

The following is based on my observations and common sense.  However, usually with these wealth series, I base the post off of rich friends that I know of that have over a million dollars.  Now for my discussion about the Financial Saving Delta.

Your Financial Savings Delta is simply:

(Discretionary IncomeAll Other Expenses) = Savings Delta

“Discretionary Income” is the money from your paycheck that could be in your wallet.  So it’s your Gross income – (Taxes, medical, 401(k) contributiosn, and practically anything else that is automatically taken out of your paycheck).

“All Other Expenses” is all the expenses that you spend your discretionary money on.

It’s a very straight forward simple equation, but knowing it and actually increasing it are 2 different matter!

The 1st way to increase the Savings Delta is to increase the “Discretionary Income” while holding the “All Other Expenses” constant.

 So what are the ways to increase the “Discretionary Income”:

  • Get a part time job in addition to your fulltime job.  If you are a work house, you could instead get another full time job in addition to your 1st full time job.  Yes, I’ve thought about this, but I want to know my kid’s names (plus I love them…)
  • Win at the neighborhood poker night game (I’m good at this, but not much money to win that way, plus the booze costs make it a fun break even event).  I could go bigger scale, but I could also lose bigger too.  Maybe someday I’ll try it out, but for now I’m good.
  • Find a product to sell on eBay.  I’ve been successful with this in the past!  Note that I didn’t say sell your old stuff.  While this is commendable, it’s a limited source of product.  And besides, most often you sell your stuff at a loss vs. what you initially paid.
  • Investment!  Stocks, bonds, real estate, whatever you fancy…  I hope to really expand this area soon!
  • Blogging (lol, to date (almost 6 months) I’ve made $5.00…  That works out to be about a penny and a half per hour of work!  Move over Bill Gates, I’m moving on up!

 The 2nd way to increase the Savings delta is to decrease the expenses that you have. 

This is easier than it sounds!  Here are some ways to do so:


It is very important to increase that Savings Delta though, and then invest it!

Can you think of any additional ways to dramatically increase the Savings Delta?

13 Responses to Wealth Tip #5: Increasing Your Financial Savings Delta

  1. A curious fact is it’s easiest for most people to make the savings (however hard they protest — a few people with six kids and little income can’t cut back, but most can).

    However if you always think ‘less’ then you’ll probably earn less, too. It’s just the way our brains work IMHO.

    Definitely best to go for both!

    Congrats on the $5! The first $100 is the hardest, they say… 😉
    .-= Monevator´s last blog ..Earn more money by tackling your mental beliefs =-.

  2. I agree, it’s tempting to try to scale back everything as much as possible to see how large of a delta that can be created.

    A team isn’t a good team if it doesn’t have a great offense and defense!

    Yeah, if I were blogging for money, I would have quit a long time ago. Luckily, I’m blogging because of the other benefits, the biggest reason being self-improvement.

    Thanks for stopping by, I borrowed that book you reviewed “The Snowball” from the library! It’s much longer that I expected!

    Still I can’t wait to sink my teeth into it.
    .-= Money Reasons´s last blog ..What I Have Learned To Date From Blogging! =-.

  3. It’s not the world’s greatest investing book, but it is a very interesting read for a Buffett fan, and does show he is a real human being, with strengths and weaknesses alike.

    Hope you like it!

  4. @Monevator
    I’m especially interested in reading about his youth! From the article on your site, it sounds like it should be a blast!!

  5. […] Wealth Tip #5: Increasing Your Financial Savings Delta:  this is really just a different way of saying increase your income and reduce your expenses.  But sometime hearing it a different way helps other obtain a deeper understanding of the importance of the delta between savings/earning and spending…  Plus, it reinforces the concept in our minds and helps us keep focuses.  I also needed to create the list of ways to accomplish earning more and reducing expenses.  Sometimes, it helps me think of new ways to accomplish my goals by doing this. […]

  6. […] Money Reasons introduces Wealth Tip #5: Increasing Your Financial Savings Delta […]

  7. wonderful post! I hope to increase my savings delta too =)

    lol, blogging is definitely not passive income, but it’s fun! =) I think I can make more money picking up cans in the street and returning them at the bottle depot than I am right now blogging haha.
    .-= youngandthrifty´s last blog ..Carnival of the Young and Thrifty Edition #3 =-.

  8. @YAT
    Thanks, I like to take things and put my own wrapper around things.

    LOL, I like the comparison to picking up cans on the street! I do get tickled when I google a topic that I wrote about and I’m no long on page 15…

  9. […] OutOfYourRut.Com:  Why earning more money is more important than frugality – Kevin brings up a good point!  I especially like this post because it reminds be of an analogy that I alway have running in my head about this subject matter.  Being frugal is like having a great defense in football, It’ll prevent points from the other team from being gained (like debt).  But without a good offense (income sources), you’ll never get ahead.  It’s all about the ”Increasing the Saving’s Delta“ !!! […]